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01/11 16:25
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative indicators: a net loss of $7.9 million, unrealized losses in investments, and an adjusted EBITDA loss. Despite revenue growth and a stock repurchase program, the debt refinancing increases overall debt. The Q&A session highlights concerns about unclear management responses and lack of guidance on Monomoy REIT. These factors suggest a negative market reaction, likely between -2% to -8%.
Fee-paying assets under management (AUM) Grew 9% year-over-year to approximately $594 million or 10% on a pro forma basis to approximately $601 million. The growth was driven by strategic partnerships and investments, including Kennedy Lewis Investment Management's commitment of up to $150 million in leverageable capital to Monomoy REIT.
Revenue Fiscal first quarter revenue was $10.8 million compared to $4 million for the prior year period, marking a significant increase. The rise was primarily driven by $7.4 million in revenue recognized from the sale of the second Monomoy BTS build-to-suit property.
Net loss Reported a net loss of $7.9 million for the quarter versus net income of $3 million a year ago. The loss was primarily due to unrealized losses on GEG's investments in GECC common stock and the CoreWeave-related investment.
Adjusted EBITDA Adjusted EBITDA for the quarter was a loss of $0.5 million compared to a gain of $1.3 million in the prior year period. This decline was attributed to unrealized losses on investments.
Cash balance Ended the quarter with approximately $53.5 million in cash, providing flexibility to support growth initiatives and take advantage of opportunities.
Monomoy BTS property sale Sold its second build-to-suit development property in Canton, Mississippi for over $7 million, generating a gain of over $0.5 million.
Monomoy Construction Services revenue Contributed approximately $700,000 in revenue during its second full quarter since inception.
Investment management and property management fees Increased 12% over the prior year period, driven by growth in fee-paying AUM and growing rental income.
GECC equity proceeds Raised approximately $28 million in equity proceeds, including $15 million from a private placement and $13 million through its at-the-market equity program.
GECC debt refinancing Refinanced $40 million of 8.75% notes due in September '28 with $57.5 million of 7.75% notes due in December '30, reducing annual cash interest expense by 100 basis points and extending debt maturity.
Monomoy BTS property sale: Sold its second build-to-suit development property in Canton, Mississippi for over $7 million, generating a gain of over $0.5 million.
Monomoy Construction Services: Completed its second full quarter since inception, contributing approximately $700,000 in revenue.
CoreWeave-related investment: Received over 100% of the initial $5 million investment in distributions to date, with meaningful upside potential despite recent volatility.
Partnership with Kennedy Lewis Investment Management: Committed up to $150 million in leverageable capital to Monomoy REIT to accelerate real estate platform expansion.
Woodstead Value Fund investment: Purchased 4 million newly issued shares of GEG common stock at $2.25 per share, raising approximately $9 million in equity capital.
Monomoy REIT property acquisitions: Deployed over $13 million to acquire 7 new properties at attractive cap rates and acquired a land parcel for tenant expansion under a new 10-year lease.
Fee-paying AUM growth: Increased 9% year-over-year to approximately $594 million, or 10% on a pro forma basis to $601 million.
GECC refinancing: Refinanced $40 million of 8.75% notes with $57.5 million of 7.75% notes, reducing annual cash interest expense by 100 basis points and extending debt maturity.
Stock repurchase program: Repurchased 5.6 million shares for $10.9 million at an average price of $1.93 per share, leaving $14.1 million in remaining program capacity.
Expansion of credit and real estate platforms: Focused on growing fee-paying AUM and scaling platforms to create enduring shareholder value.
Integration of construction capabilities: Fully integrated construction capabilities in-house to offer tenants turnkey solutions and capture more value through the property life cycle.
Exposure to First Brands bankruptcy: GECC held exposure to First Brands through syndicated loans, which traded down sharply before filing for bankruptcy. This negatively impacted NAV and led to placing First Brands investments on nonaccrual.
Unrealized losses in CoreWeave investment: Recent volatility in CoreWeave stock price contributed to unrealized losses, impacting GEG's net loss for the quarter.
Net loss for the quarter: GEG reported a net loss of $7.9 million, primarily due to unrealized losses on investments in GECC common stock and CoreWeave-related investments.
Adjusted EBITDA loss: Adjusted EBITDA for the quarter was a loss of $0.5 million compared to a gain of $1.3 million in the prior year period, indicating operational challenges.
Debt refinancing risks: GECC refinanced $40 million of 8.75% notes with $57.5 million of 7.75% notes, reducing interest expense but increasing overall debt levels.
Fee-paying Assets Under Management (AUM): Expected to grow as the company focuses on expanding its credit and real estate platforms.
Real Estate Platform Expansion: Monomoy REIT to accelerate expansion with up to $150 million in leverageable capital from Kennedy Lewis Investment Management.
Build-to-Suit (BTS) Development: Construction on the third BTS property nearing completion with a robust pipeline of development opportunities.
Alternative Credit Business: GECC positioned to invest in income-generating opportunities in the coming quarters due to strong balance sheet and ample deployable cash.
Stock Repurchase Program: Expanded by $5 million to $25 million in total, with $14.1 million remaining capacity as of November 11.
Fiscal 2026 Focus: Company remains focused on growing fee-paying AUM, scaling credit and real estate platforms, and translating strategic progress into sustained financial performance.
Stock Repurchase Program: In July, the Board expanded the stock repurchase program by $5 million to $25 million in total. Through November 11, the company repurchased 5.6 million shares for $10.9 million at an average price of $1.93 per share, leaving $14.1 million in remaining program capacity. These repurchases reflect continued confidence in the company's long-term value and are considered a highly accretive use of capital.
The earnings call reveals several negative indicators: a net loss of $7.9 million, unrealized losses in investments, and an adjusted EBITDA loss. Despite revenue growth and a stock repurchase program, the debt refinancing increases overall debt. The Q&A session highlights concerns about unclear management responses and lack of guidance on Monomoy REIT. These factors suggest a negative market reaction, likely between -2% to -8%.
The earnings call highlights several positive developments: a strong increase in net income, a 140% revenue growth excluding one-time sales, increased dividends, and a robust stock repurchase program. The strategic partnership and credit business expansion further boost prospects. Despite potential market risks, the absence of Q&A concerns suggests confidence in management. The positive financial performance and strategic initiatives suggest a likely stock price increase of 2% to 8% over the next two weeks.
The company's earnings report shows mixed signals: a 15% revenue growth and increased AUM are positive, but a net loss of $4.5M and reduced EBITDA are concerning. The share buyback at a discount and strategic acquisitions are positive, yet market volatility and investment risks pose challenges. The absence of Q&A insights and unclear future profitability amidst unrealized losses suggest a neutral outlook for the stock price in the short term.
The earnings call highlights strong financial performance with tripled revenue and increased AUM, strategic initiatives like the CLO joint venture, and a robust cash position. The share repurchase program and strategic investments like CoreWeave are positive indicators. Despite unrealized losses and competitive pressures, the optimistic guidance and active capital management suggest a positive outlook. The absence of negative sentiment in the Q&A further supports this view. Overall, the stock is likely to experience a positive movement in the short term.
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